Uber slams liability legislation as 'attack on innovation'

Hotly contested legislation passed the Assembly floor Tuesday that would put companies such as Uber Technologies, Lyft and Sidecar the first ones on the hook in terms of liability whenever a driver has their smartpthone apps open and is looking to drive passengers for hire.

AB 2293 by state Assemblywoman Susan Bonilla, D-Concord, is an insurance-industry-sponsored bill that has been criticized by multiple smartphone dispatching companies. The final tally was 71 votes in favor and none against, which means it will now go to the state Senate for further consideration.

“AB 2293 is an attack on innovation and the technology industry," the company said. "The bill only serves to help the insurance industry and will increase litigation by trial attorneys. At Uber, we are proud of our safety record and our insurance coverage, which is more than triple the coverage required by drivers in California. We are hopeful that the Senate, as other states have, will work with us to improve the bill and to provide an approach that supports innovation and consumer choice.”

Bonilla's bill would require transportation network companies — as the smartphone dispatching services are labeled by the California Public Utilities Commission — to provide primary insurance for drivers and defend and indemnify them anytime they have a ride-booking application open. AB 2293 would also make companies like Uber tell drivers that their personal policies likely will not apply while they are providing rides for money.

It is supported by five property casualty insurance trade associations which represent companies that offer nearly 100 percent of the commercial and personal auto insurance policies in California.

Currently, the CPUC requires TNCs to have $1 million of insurance, but those policies are only required to be in effect when a driver is providing TNC services, which the CPUC left undefined when it adopted rules for the new services last September. The PUC in March proposed amending its rules to require insurance whenever an app is on.

Bonilla wants to eliminate the sort of ambiguity that came out of a New Year's Eve accident in San Francisco in which an UberX driver ran over and killed a little girl while driving around waiting for rides with the Uber app open. In that case, Uber claimed it wasn't liable because the driver was not responding to a call, and the girl's family filed a lawsuit against Uber demanding compensation.

That is not adequate for Bonilla, who says companies like Uber and Lyft should be on the hook from the beginning for defending drivers and managing claims, rather than simply being required to provide coverage if a driver's personal policy does not pay, a regulatory situation that she contends allows for potentially arduous and time-consuming processes to exhaust the primary policies.

The taxi industry had supported a more far-reaching measure that would have required transportation network companies to have commercial coverage for drivers 24 hours a day, but that died in committee.

A national campaign funded by the Taxicab, Limousine & Paratransit Association, meanwhile, has been pushing a message around the country, including in California, warning of potential insurance gaps that could impact TNC drivers and passengers.